It is depressing to watch the continued erosion of the proud currency that was once known as “King Dollar.” As this column is being written, it costs $1.50 to purchase one Euro, and the Canadian dollar-once the junior partner to the American dollar-now trades at $1.05. The dollar is suffering from two major factors: the continuing flood of debt caused by excessive federal spending and the Federal Reserve Board’s policies of pumping up the money supply and keeping interest rates excessively low.
The Fed believes that keeping interest rates at record low levels will move money out of savings and directly into the economy. It is working. Who wants to hold certificates of deposits with interest rates well below 1 percent?
Instead of investing money in more stable vehicles, retirees and investors are funneling their assets into commodities and the stock market to get a higher return on investments. Some fear that stocks and commodities are the next “bubbles” in the economy that could burst with devastating effects to investors. If that happens, remember the role that the Fed’s policies played in bringing about the turmoil.
Budget debate begins
The 2011 Regular Session of the state Legislature has begun, and all eyes will be on the state budget. After using over a billion dollars in non-recurring revenue in the last budget, some hard choices are going to have to be made in the next eight weeks.
Gov. Jindal submitted a budget plan that he touts as not making any further cuts to higher education and health care and not raising taxes. Some legislators contend that the governor’s proposal uses too much one-time money, some of it from sources that can’t be relied upon to be in hand during the course of the next fiscal year. The key to the budget debate will undoubtedly come down to how much one-time money is used and the reliability of the sources of that revenue.
Use of non-recurring revenue in excess of the projections for revenue growth in the next fiscal year would be a continuation of kicking the can down the road when it comes to addressing fiscal problems.
The governor and legislators are undoubtedly counting on higher revenue estimates at the next Revenue Estimating Conference meeting to help solve the budget problems.
Battle of Boeing
The National Labor Relations Board (NLRB) is pursuing an “in your face” campaign to enhance the power of organized labor in disputes with business and industry in America.
The latest battle in this premeditated offensive centers upon The Boeing Company’s location of an assembly line in South Carolina for its new 787 “Dreamliner.” The International Association of Machinists (IAM) union has prevailed upon the NLRB to attempt to prevent Boeing from going ahead with its plant opening scheduled in the next few weeks. The NLRB alleges that Boeing is opening the facility in South Carolina instead of the state of Washington to retaliate against the IAM for strikes the union has engaged in at the facilities in Washington. Boeing disputes the “retaliation” claim, arguing that it has announced expansions in Washington that will result in new jobs for 2,000 union members.
It appears that the NLRB intends to work on unions’ behalf to oppose plans moving industrial facilities from states that have no Right-to-Work laws to states that have them. If the agency pursues that policy, the net effect could well be more American investment and jobs leaving the country at a time when our economy and our workers desperately need them here.